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Home / Medical / Theranos is reportedly closing after failing to sell itself

Theranos is reportedly closing after failing to sell itself

Posted on Saturday, September 08, 2018 by Kristina Tyler

Theranos the blood-testing company founded by Elizabeth Holmes is going out of business. Gilbert Carrasquillo Getty Images

The company plans to get everything finished as soon as possible, proceeding next Monday with a complete dissolution of the organization.

It is the latest twist in one of the most dramatic rise-and-fall stories USA business has ever seen and comes three months after Elizabeth Holmes, who founded the company at the age of 19, was charged with fraud along with Sunny Balwani, her former lover and the company's former chief operating officer.

CEO David Taylor confirmed that the firm will dissolve after efforts to pay creditors - to whom they owe $60 million (£46.4 million) - with its remaining supply of cash.

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It also added Theranos founder Elizabeth Holmes has settled a shareholder lawsuit in July that was created to recover whatever can be salvaged from the firm.

"The defendants also represented to investors that Theranos would generate over $100 million in revenues and break even in 2014 and that Theranos expected to generate approximately $1 billion in revenues in 2015 when, in truth, the defendants knew Theranos would generate only negligible or modest revenues in 2014 and 2015", the U.S. Attorney's Office said.

We've covered Theranos numerous times. Investors and the media hyped Theranos as a breakthrough in the large blood-testing market, where the United States diagnostic-lab industry posts annual sales of over $70 billion. It may take up to a year to have everything settled, but the company's employees worked for the last time on August 31.

The company, founded in 2003, became a darling of investors with its promise to perform tests on only a tiny amount of patients' blood, eventually scoring a partnership with Walgreens, the nation's largest drug store chain, even though it had to void or correct thousands of inaccurate test results. Ultimately, the startup has defaulted on a loan from Fortress Investment Group, which gives the group the right to take control of the company's remaining assets. A notoriously secretive company, Theranos shared very little about its blood-testing machine, nicknamed Edison, with the public or medical community.

Theranos did not immediately respond to Reuters' request for comment. The SEC claimed that she and Ramesh Balwani, her romantic partner and former president of Theranos, had engaged in "an elaborate, years-long fraud in which they exaggerated or made false statements about the company's technology, business, and financial performance". Holmes settled with the SEC, agreeing to pay $500,000 in fines and penalties.